Romania and Poland have been shortlisted by the Swedish group Electrolux, the world's largest producer of home appliances, as the possible locations for a new washing machine plant in Central and Eastern Europe, which will be built under a 60 million-euro investment. The group will make the choice in the next few weeks.
However, the Swedes are saying that the Romanian Government has not yet provided them with sufficient incentives that could make up for Romania's weaknesses, such as high transportation costs.
"Electrolux has not yet finally decided on the location, however Romania is on the short list. Our intention is to take the decision within the next few weeks," Ulrich Gartner, AB Electrolux Vice President, Public Relations Europe told Ziarul Financiar.
Romania's presence on the short list has also been confirmed by the Romanian authorities. "We can confirm that there are talks between ARIS and Electrolux over a significant investment, worth some 50-60 million euros, for the production of home appliances - washing machines. Out of several destinations that were originally analysed by Electrolux, Romania and Poland were shortlisted as possible locations for the investment project," Alexandru Popa, chairman of the Romanian Foreign Investment Association (ARIS) told Ziarul Financiar.
Romania's strong points include the lower labour costs and the fact that Electrolux already deals in production on the Romanian market, as it owns a plant in Satu Mare. The weak points regard the Government's failure to come up with enough incentives.
"A little bit of a disadvantage for Romania, however, are the transport distances, which mean longer transportation time and thereby additional cost. So far, the Romanian government has not presented any incentives that would compensate for these," Ulrich Gartner says.
ARIS' Alexandru Popa has also confirmed that Electrolux is hesitating because of the higher transportation costs in Romania as compared to Poland. "The Swedish company has requested a series of additional incentives, other than the ones we have come up with in accordance with the current legislation and especially with the Fiscal Code and law 332/2001 on foreign direct investment with significant impact on the economy," Popa said.
According to the ARIS chairman, granting additional incentives, besides the ones stipulated by the law, is very difficult, especially since Romania is negotiating its European Union accession, which implies very strict rules about state aids and incentives.
"Given the negotiation chapters that we have closed with the European Union, in the opinion of the Ministry of Finances, no more tax incentives (other than those included in the Fiscal Code) can be introduced, and strict adherence to legal regulations on state aid is extremely important at this time, when we are about to finalise integration negotiations," Popa stated.
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